January has been a month full of negative housing data, but today’s, at least, was relatively good news.
Sales of new homes dipped a slight 0.2 percent to a 481,000 annualized pace in January, according to data released Wednesday by the Commerce Department. Economists had expected a bigger decline, to about a 470,000 pace. Even with the drop, it was the best January for new home sales since 2008, and the pace of sales remained near post-recession highs.
Sales varied drastically from region to region: While the South saw a 2.2 percent increase, sales in the winter-battered Northeast plunged 51.6 percent last month, hitting a low 15,0000 annual rate. Figures for November and December were also revised upward, to yearly paces of 446,000 and 482,000, respectively.
New home sales only make up about 7 percent of the overall residential market. So January’s report is an admittedly thin ray of sunlight for housing, which has had a gray, gloomy start to 2015. Earlier this week, a report of sales of existing home sales, a much larger indicator, showed a 4.9 percent January drop, and new construction has stalled early in the year. Meanwhile, growth in home prices continues to speed along – normally a good sign, but worrying when they outpace wage growth and price out first-time buyers.
Today’s data continued that last trend, with the median sales price of a new home increasing 9.1 percent year-over-year to $294,300. “The high end market is improving; the low end is not,” IHS Global Insight economists Stephanie Karol and Patrick Newport write in an e-mailed analysis. “Sales of high end homes – over $500,000 – increased in 2014, while sales of low end homes – under $200,000 – fell…Builders are catering to a wealthier client, who wants a large new house inside a metropolitan statistical area, even if it means building on a smaller lot.”
Still, the supply of available new homes increased to their highest level since 2010, a hopeful sign that increased purchases will eventually follow. For that, analysts are looking ahead to the typically busy spring selling season, which should paint a clearer picture of the market’s overall health. In the meantime, another area of the housing industry – renovations – is thriving as homes available for sale grow scarce and owners opt to stay in their houses longer.
On Tuesday, Home Depot, the nation’s largest home-improvement retailer, reported a blockbuster fourth quarter of 2014. The company saw a 36 percent rise in profits and had its biggest sales day ever on Black Friday of last year. Shoppers spent $500 million in Home Depot stores the day after Thanksgiving, according to the company. Home Depot’s main competitor, Lowe’s, also posted better-than-expected fourth quarter sales and profits Tuesday. The stock prices for both companies have surged over the past year.